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Escalator Clauses: For The Up-And-Down

By Scott Rodgers

Republish: EasyPublish™
Published: 27Aug2009
Word count: 562
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Every project has some unknowns. But what about when changing cost of materials plays a large role? That's when an escalator clause can come in handy.

I used to do some pretty straight estimating that didn't hardly take any time at all. I would go out and price a job as quick as having your fingers, but after a while, I started to find out that this was really hurting my business. I was not able to come up with an accurate figure for a job off the top of my head. I'm not a financial wizard; I know about building. Well, gradually, I started to become smarter in bidding, but there still were some times when I would lose my shirt on a job.

What I came to learn was that there are various factors in bidding at present there and challenges. Sure, you have to know how long it's going to take, and identified specializations that are going to take extra time and energy. You have to know how materials will work together, how long it will take to install them, and what specific steps you'll take. You have to think about other considerations like weather, crew availability, and daily transportation.

All of it's enough to give you a headache, but that's not where it ends. There are a few other things that you also should know about.

Remember when the cost of roofing materials went "through the roof"? Some of the basic charges skyrocketed. What I heard was that it was because of a huge demand in China for basic chemicals that are involved in making roofing materials. I never found out for sure if this was the case. What I did find out is that there's an easy way to avoid getting ripped off by being in the middle of this kind of equation.

An escalator clause is when you write something into the contract that allows you to charge more to customer if the price of materials rises during the job or between when the job is bought and when the job is done. This is an extremely valuable part of an agreement, because builders are always vulnerable to these kinds of price changes.

That's exactly what I learned when I started to use this escalator clause myself. All I would do is include the specific kind of language that would tell a customer that if the cost for something went way up, they would have to pay extra for the job based on that change. That way, I would recoup some of the costs for when I pay for the materials myself.

This is an extremely good thing to know if you're bidding jobs and working for yourself, dealing with a range of clients, and having to bid accurately in order to make a profit. Take it from me. These are things that you learn are the course of time, that are central from saving you from paying out too much, and protecting your bottom line so that your business takes care of your family, and generates revenue, adding to the economy, rather than folding, going bankrupt, and becoming a burden. To take time to research this kind of tool for your future contract agreements for your roofing jobs, and you'll rest easy, knowing that your knowledge helped contribute to a job well done.

Scott Rodgers uses his roofing experience to instruct others on the ways of contracting. See more at http://www.eLocalRoofers.com

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